World Bunkering > News > Spring 2011 > Northern Europe

Environmental concerns remain one of the major issues affecting the bunker market in Northern Europe, with sulphur regulations biting ever tighter, and more and more ports introducing features such as cold-ironing. As mentioned in the last issue of World Bunkering, there are even moves towards setting up an LNG bunker infrastructure, particularly within the Baltic region. At the time of writing, the Danish Maritime Authority (DMA) had just put out a tender for a feasibility study establishing an LNG fuelling infrastructure across the region. In an accompanying statement, the DMA said that the analysis was part of a major project with participation from, among others, the Scandinavian countries and several large companies in the energy sector. The DMA is the coordinating partner of the project. It believes that the introduction of new sulphur limits in 2015 will make LNG an increasingly attractive option for vessels operating in the Baltic on a full-time basis.

The study should have the aim of making LNG a competitive fuel for shipping in the sea areas covered by the project, the DMA said – that is, the Baltic Sea, the North Sea and the English Channel.

It sets out a number of conditions, including:

• The decision paper must be relevant for central stakeholders as shipowners, ports, LNG providers, Member States and other states and the EU etc.
• Simultaneously the recommendations from the strategic decision paper must be validated through tests, including a port point of view.

The DMA states that the starting point for the project must be an LNG supply chain, covering the entire process from the reception of LNG and/or liquefaction of natural gas from the gas grid to LNG, via storage and distribution of LNG to the use of LNG in ships for propulsion.

Any recommendations must encompass a physical infrastructure for LNG bunkering stations as well as the supporting structure of public regulations, classification rules, and industry standards. However, the authority does point out that there are considerable problems associated with establishing an infrastructure of the type it lays out, not least the problem that the infrastructure will not evolve if there are no ships to use it, and owners will not order LNG ships if there is nowhere to fuel them.

“The need for an infrastructure of LNG filling stations should be considered against the background that there is a well-established, competitive system for traditional bunker oil without major investment needs. On the other hand, there is no infrastructure of any importance in the LNG field. The establishment of a useable infrastructure requires great investments if it is to cover a major geographical area,” the DMA says.

“At the same time, it is a dilemma that the shipping companies are prepared to invest in LNG operation only if the necessary possibilities of acquiring fuel are available, while the LNG suppliers are prepared to invest only if the shipowners demand LNG. “The work on this dilemma is a key issue of the project.”

Could change be on the cards? As reported in World Bunkering, a number of concept vessels using LNG as fuel have been developed – most recently, DNV’s design for a LNG powered VLCC, Triality, which would, the designers claimed, “almost eliminate local air pollution”. Concept ships, of course, are rarely built, but even so, Lars Petter Blikom, Segment Director LNG at DNV, was quoted in Bunkerworld in December as saying that: “We have seen big changes in attitudes on the shipowning side [to the use of LNG] in the past six months.”

Owners based in Scandinavia and the Baltic are at the forefront of this change. For example, Norwegian-based Eidesvik Offshore recently ordered its fifth LNG fuelled supply vessel from Kleven Maritime. The company claims the move confirms its position as world leader in the operation of environmentally friendly gas powered supply vessels. A statement says the contract value is about Nkr440 million (US$ 73 million). Eidesvik had already ordered a similar vessel earlier in 2010.

Eidesvik says the vessel will be specially equipped for operations in northern areas and will provide 26 new jobs in the company. It is being built to the VS 489 LNG platform supply vessel (PSV) design and will be 89 metres long and have a beam of 21 metres. The ship will be delivered in autumn 2012.

Eidesvik took delivery of the world’s first gas-powered cargo ship, the Viking Energy, in 2003 and since then has built the gas ships Viking Queen and Viking Lady.

Rotterdam suffers

However, against all this, day-to-day bunkering activity has to continue, and a number of changes have taken place on the bunker scene. Most noticeable is that, despite a recovery in the box trade and levels of throughput in the port, bunker volumes at Rotterdam have continued to decline, falling for the fourth year in a row.

Total bunker volumes in 2010 fell by 2.23% against 2009, to 11.9 million tonnes. The fall came despite an 11.1% increase in cargo throughput. Including lubricants, total 2010 bunker volumes fell to 11.9 million tonnes in 2010, down from 12.17 million tonnes in 2009. The figures were slightly down on earlier port projections of sales of 12.08 million tones, showing that recovery of cargo volumes has not had the anticipated effect. Sales of residual fuel have in fact dropped every year since 2006 – well before the shipping crisis hit – when they peaked at 13.1 million tones; a 4% year-on-year decline. Despite this fall, residual fuels accounted for 94.63% of Rotterdam’s total marine fuel sales in 2010. However, there was a huge increase in sales of MGO, which increased by 72% in 2010 to 520,000 tonnes. This increase is countered by a corresponding drop in MDO.

Despite this slight fall in volumes, however, Rotterdam remains one of the busiest bunkering ports in the world, and one which is a major focus for companies looking to expand, either organically or through acquisition. In early December, for example, Baltic Oil terminals completed the acquisition of bunker storage business Petroval Bunker International B.V. from Petroval Pte. Limited for $10.8 million – a purchase that was first announced in February 2010. Petroval operates two heated fuel oil tanks, with a total capacity of 120,000 cu m, in Europoort Rotterdam, which it leases from Vopak. Baltic has said that it will take advantage of the acquisition to establish a single management team for all of its trading and terminal activities both in Kaliningrad and Rotterdam.

Brightoil also established a trading office in Rotterdam in 2010, underlining both the continuing significance of the port, and its own ambitions to establish a global presence. While the opening of a similar operation in Singapore was followed by the launch of physical operations in the port, there are as yet no indications that Brightoil intends to follow the same pattern.

OW expands physical operations in Sweden OW Bunker has launched a new barge in Gothenburg in December, a year after it initially launched physical operations in the port. Vadero Highlander is a double-hulled 1,862-dwt barge, first launched in 2003. It has a pumping capacity of 350 cu m, and will carry all grades of quality fuel oil products for customers.

According to OW Bunkering, the move shows the company’s commitment to further expansion within Scandinavia. It also strengthens OW Bunker’s strategic relationship with passenger and freight ro-ro operator DFDS. “Fast bunkering is a key focus in shortsea shipping where time and efficiency is critical to success – an area and a market where OW Bunker has real expertise,” OW Bunker said in a statement.

Commenting on the move, Jane Dahl Christensen, executive vice president, OW Bunker, said: “Launching a state-of-the-art, modern vessel and growing our physical operations highlights our commitment to the short-sea shipping market within the region, and the local and global customers operating within Scandinavian waters. As well as a developed supply base, we have a real understanding of the local market, which, combined with our global infrastructure, enables us to provide customers with quick access to quality products wherever and whenever they need them, and importantly, at the right price. The partnership that we have with DFDS is testament to this.”